Intel's Valuation Concerns
Investing.com — Intel may be worth more separated into smaller entities than the chipmaker is at its current valuation, according to analysts at Northland Capital Markets.
Shares in Intel (NASDAQ:INTC) have plunged by more than 52% so far this year, as the firm struggles to keep up with rivals like Nvidia (NASDAQ:NVDA) in the race to manufacture artificial intelligence-optimized chips.
> "Intel Products continues to lose market share and lacks a competitive AI product," the Northland analysts said in a note to clients on Tuesday.
In August, Intel announced plans to slash capital expenditures by 17% versus the prior year to $21.5 billion and unveiled a third-quarter forecast that missed analysts' estimates. The company has also announced cuts to more than 15% of its workforce, or roughly 17,500 people, and indicated it would suspend its dividend in the fourth quarter as part of a broader turnaround effort.
Chief Executive Pat Gelsinger and key executives are reportedly considering a possible split of Intel's product-design and manufacturing businesses to revive the company's fortunes, according to Bloomberg News.
Meanwhile, Qualcomm (NASDAQ:QCOM) has approached Intel over a potential takeover bid, with CEO Cristiano Amon actively examining various options for a deal involving the over five-decade-old company, as reported by Reuters in September. Qualcomm executives have contemplated possibly acquiring parts of Intel's design business, including its PC design division.
Infrastructure chipmaker Marvell (NASDAQ:MRVL) has also emerged as a potential buyer of Intel's programmable chip business, Altera, according to Reuters.
> "While discouraging, we believe Intel, broken up into pieces, is worth more than its current valuation," the Northland analysts stated.
Gelsinger has made Intel's foundry, or contract manufacturing division, a centerpiece of his plans to turn around the company.
The foundry division, which recently signed Amazon (NASDAQ:AMZN)'s cloud services unit as a customer for custom AI chips, is slated to be established as an independent subsidiary with its own operating board and has been reporting separate financial results since the first quarter of 2024.
(Reuters contributed reporting.)
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